Oil Eases as Investors Monitor Trade War
(Bloomberg) -- Oil eased after the biggest increase in more than two weeks as investors monitor developments in the U.S.-China trade war, while stockpiles shrink at a key American crude storage hub.
January futures lost 0.3% in New York after rising 3% on Wednesday, the biggest increase since Nov. 1. China’s Vice Premier Liu He said he was “cautiously optimistic” about reaching an initial trade deal even as President Donald Trump is expected to sign a bill supporting Hong Kong protesters, a move that could complicate negotiations. U.S. crude inventories at Cushing fell 2.3 million barrels last week, the most since August.
The on-again, off-again trade talks between Beijing and Washington have sapped global demand and weighed on oil prices, and China said the U.S. Senate’s bill supporting the protesters was a “gross interference in Hong Kong affairs.” Supply concerns have reappeared after unrest erupted in Iraq and Iran this month -- two of the Middle East’s five biggest producers.
“It looks like the trade talks may hit a snag due to the U.S. senate passing a bill supporting Hong Kong protesters,” said Howie Lee, a Singapore-based economist at Oversea-Chinese Banking Corp. Attention is gradually moving to the OPEC+ meeting in December and turmoil in some member countries may weigh on the outcome, he said.
West Texas Intermediate for January delivery lost 17 cents to $56.84 a barrel on the New York Mercantile Exchange as of 7:04 a.m. London time. The December contract, which expired Wednesday, added $1.90 to close at $57.11.
Brent for January settlement fell 18 cents, or 0.3%, to $62.22 on the London-based ICE Futures Europe Exchange. The contract climbed $1.49 to $62.40 on Wednesday. The global benchmark crude traded at a $5.39 premium to the WTI.
Liu, China’s chief trade negotiator, made the comments in a speech in Beijing, according to people who attended the dinner and asked not to be identified. He also explained China’s plans for reforming state enterprises, opening up the financial sector, and enforcing intellectual property rights -- issues which are at the core of U.S. demands for change in China’s economic system.
Crude inventories at Cushing, Oklahoma, fell for a second week to the lowest level in about a month. While nationwide stockpiles increased by 1.38 million barrels, it was less than the 1.5 million build estimated in a Bloomberg survey.
--With assistance from James Thornhill.
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